If a market has two polluting firms that have different abilities to reduce pollution, then across-the-board cuts in waste are not the most efficient solution.

Question

Quizplus · Accepted Answer

The firms with lower ability to reduce pollution will bear a greater burden of the cuts and may even go out of business, while the firms with greater ability may not be fully optimizing their pollution reduction potential. A more efficient solution would be to set differentiated pollution quotas that take into account each firm's ability to reduce pollution.

If a Market Has Two Polluting Firms That Have Different